Full-year sales of digital music tracks and albums have decreased in 2013 for the first time since Apple launched the iTunes Store in 2003, and industry executives blaming streaming music services like Pandora and iTunes Radio for the drop.

According to Nielsen SoundScan, sales of digital tracks fell from 1.34 billion units in 2012 to 1.26 billion in 2013, a drop of 5.7 percent, reports Billboard. Digital album sales also fell 0.1 percent to 117.6 million, down from 117.7 million units the year prior.

The industry was not surprised by the dip in digital per-track performance after three quarters of weak sales, the publication said, but the drop for full-albums was somewhat unexpected given a strong start in early 2013.

Just as they had underestimated the power of digital music sales years before, industry executives appeared to once again be unwilling to cede ground to a new format, this time in the form of ad-supported or subscription Internet streaming services. Earlier in 2013, these people were reportedly reluctant to accept that Internet radio was cannibalizing digital sales, reports Billboard.

Instead of being caught off guard, however, executives apparently struck deals beneficial enough to offset the slip seen by digital sales. The actual results have yet to be revealed as SoundScan has not released its streaming numbers for 2013.

The overall breakdown of album sales marketshare for 2013 saw CDs leading with 57.2 percent, followed by digital at 40.6 percent and vinyl at 2 percent. Cassettes and DVDs made up 0.2 percent of all album sales.

When Apple's iTunes Store -- previously the iTunes Music Store -- opened its digital doors in 2003, it quickly became a popular alternative to brick-and-mortar music stores. Driven by a massive installed iPod, PC and Mac user base, iTunes took over as the No. 1 music seller in the U.S. in 2008, and was the biggest in the world by 2010.

Apple has also fielded its own streaming service in iTunes Radio, which was first announced alongside iOS 7 at last year's Worldwide Developers Conference. Like other streaming solutions, iTunes Radio is free to use with advertising support. iTunes Match subscribers, who pay $24.99 per year, can listen to the service ad-free.

Did they ever consider that maybe shitty tracks and shitty albums are the reason for the dip? I use iTunes Radio, Pandora, Spotify, and iTunes Match but if a song is good I still buy it. Maybe people didn't buy as much music because it's all the same Beiber, Ke$ha, One Direction auto-tuned CRAP!

I left the iTunes train almost two years ago. After trying to get me to pay to upgrade, I calculated I could stream from Spotify for five years before breaking even. Why should I not believe there will be an even better codec and a fee to upgrade within the next five years?

Why should I not believe there will be an even better codec and a fee to upgrade within the next five years?

Because it wasn’t a codec to which you were upgrading. In retrospect, “pay for higher bitrate” is a really silly idea, so Apple won’t be doing it again. And as we can all freely redownload our music (and everything else) now, you thinking that this would ever happen again is even more foolish.

You weren't being forced to pay to upgrade anything. iTunes Music Match makes your entire song library available in the cloud. The upgraded bit rate was just a perk so if you've ripped your friends's CD at 128kbsp, you would get it in 256 AAC just like it was on iTunes. It's a perk. The real advantage is getting to listen to your music on any device without needing to copy it to every device. I suspect they would be more apt to throw this in for free in the next year or two but $99/year isn't bad considering all the Internet bandwidth that must cost them.

I left the iTunes train almost two years ago. After trying to get me to pay to upgrade, I calculated I could stream from Spotify for five years before breaking even. Why should I not believe there will be an even better codec and a fee to upgrade within the next five years?

Spotify $10 a month, $120 a year, $600 for five years.

So how were you planning to spend $600 "paying to upgrade"?

iTunes Match only costs $125 over 5 years.

Better than my Bose, better than my Skullcandy's, listening to Mozart through my LeBron James limited edition PowerBeats by Dre is almost as good as my Sennheisers.

In respect to Spotify, you are also paying for an ever growing library and the software (the service) providing content.

I personally like Spotify because it is so much better for discovering new music compared to the iTunes buy-then-own concept, even though the majority of my library is in iTunes.

I'm not a big fan of iTunes Match. I have it, but there's not enough control over which content you want on your device and which content not. My car is where I listen to music. No wi-fi there, so I want to make sure music is on the actual device to avoid data plan issues.
iTunes doesn't allow me to filter my library by "what's on my device", which then would hide and ignore music dependent on an Internet connection.
Secondly, as soon as I download music on my iPhone I cannot 'un-download' (remove) music or a playlist. It's there until I reset my library entirely.
Lastly, Music (and iTunes on desktop, why the inconstant naming?) needs a big overhaul when it comes to UI / UX.
Navigation is unnecessarily complex and is getting outdated.

I think Apple needs to re-invent parts of their music business, as I think the current way of doing it is becoming outdated.

But in the end there will always be two camps: the ones who want to own music and the ones who stream. I do both and like both for their own reasons.

I'm not a big fan of iTunes Match. I have it, but there's not enough control over which content you want on your device and which content not. My car is where I listen to music. No wi-fi there, so I want to make sure music is on the actual device to avoid data plan issues.
iTunes doesn't allow me to filter my library by "what's on my device", which then would hide and ignore music dependent on an Internet connection.
Secondly, as soon as I download music on my iPhone I cannot 'un-download' (remove) music or a playlist. It's there until I reset my library entirely.
Lastly, Music (and iTunes on desktop, why the inconstant naming?) needs a big overhaul when it comes to UI / UX.
Navigation is unnecessarily complex and is getting outdated.

I think Apple needs to re-invent parts of their music business, as I think the current way of doing it is becoming outdated.

But in the end there will always be two camps: the ones who want to own music and the ones who stream. I do both and like both for their own reasons.

1) You can prevent tracks that are not local to the device from streaming over cellular.

2) You can keep tracks in iCloud that have not been downloaded to a particular iOS device from showing up in Music.

3) You can easily delete playlists and tracks from the Music app in iOS.

4) I personally don't want 3 or more different apps on Mac and Windows for storing and playing Music, Videos and Podcasts, and don't think that would be better for the majority. I personally don't want that on iOS either but I least see why that is better for the majority of users.

This bot has been removed from circulation due to a malfunctioning morality chip.

The reason not to use Spotify and Pandora is because they pay a minuscule amount in royalties to songwriters. If it was their choice they would pay an even lower amount than they do now. They are thieves.

Just wanna 'tune in' and say that I'm firmly in the streaming camp with Spotify! Love the service and promote it heavily to family, friends and clients.

Main reason is that for certain people like myself that have an extremely wide, varied and eclectic taste in all kinds of music... it would be financially impossible*** to own even a small portion of what I listen to, even on a daily basis. Of course I 'had' a rather large CD collection that cost a pretty penny, ripped years ago, and which I have backed up on more than one of my countless caseless drives. However, I no longer bother carrying any of the rips with me and have sold or given away all of the CDs a couple of years ago. With that said though, I do carry certain music that I have purchased through Indy Band sites***.

The absolute coolest thing though, is due to the fact that I'm often responsible for party/event music (my eclectic tastes come in handy), I can simply have the host or promoter create a Spotify account if they don't have one already, create a 'wish/play list' and send it to me. I'll maybe add to it or use a similar list and download all of the tracks (500 limit I believe) to my iPad or MBA, just in case wifi becomes 'spotty' or doesn't exist.

*** As an aside, the music industry is still changing and evolving and will for some time to come, but IMHO the Big Labels are dying a slow death. The tools and hardware to create a top professional, production quality recording from someone's basement is here and now, making studio recordings superfluous... and even unwanted by some artists that prefer to have total control and peace of mind regarding time pressures to do their thing, how and when they want to do it. The main thing left for Big Labels is promotion and marketing, because even distribution can easily be taken care of through the web using pay tools and social networks. So who really needs that blood sucking layer of authority as a creative? I would say, no one.

There's a heck of a lot of young kids and music fans coming through the schools with the chops to do even better marketing than the Big Labels provide. An artist that puts 1 or 2 social promotion managers 'in their band' is just as important as adding a technical engineer and a good lawyer these days.

I think this is they way of the future, in addition to bands releasing on networks like Pandora and Spotify FIRST, rather than after they've made a name for themselves. Also, it's been plain to see this day coming, that simply selling albums and singles is not going to pay the bills for the majority of artists or the labels.

I use the word 'artist' specifically here, because it's no different than any creative endeavor these days, whether photographer, graphic designer, director, writer... and/or musician. The sales of the 'picture, logo, film, musings or song' is not enough. They must be re-packaged, repurposed, merchandised and licensed (that's why a good lawyer is a must!).

NOTE: I would like to add that this also applies to "software developers/artists"as well. It was reported (I believe) yesterday that Rovio will be going the 100%-Free route for their next games, after seeing that more than 60% of their revenue last year came from licensing and merchandise.

Knowing what you are talking about would help you understand why you are so wrong. By "Realistic" - AI Forum Member

The reason not to use Spotify and Pandora is because they pay a minuscule amount in royalties to songwriters. If it was their choice they would pay an even lower amount than they do now. They are thieves.

See my post above.

You have to look at the streaming services as "promotional tools and platforms"... very similar to radio of old. But this "radio" is so much more capable of being used to further your means and goals as an artist. You just have to think beyond "money now" and see how you can use it to make "money down the road".

Knowing what you are talking about would help you understand why you are so wrong. By "Realistic" - AI Forum Member

When radio plays a song they pay performance royalties. I don't understand your logic about being a promotional tool. When you write a song and it is played on the radio or on television or in a film or in an ad or in a video game you should be paid a royalty for it. There is no argument you can make that will make me think otherwise.

I'm sorry if I sounded snippy. I understand what you are trying to say. I know that a lot of people hear a song on the radio or wherever and if they like it chances are they will purchase the CD or download. However, radio still pays performance license fees for the right to play music. That is fair.

1) You can prevent tracks that are not local to the device from streaming over cellular.

2) You can keep tracks in iCloud that have not been downloaded to a particular iOS device from showing up in Music.

3) You can easily delete playlists and tracks from the Music app in iOS.

4) I personally don't want 3 or more different apps on Mac and Windows for storing and playing Music, Videos and Podcasts, and don't think that would be better for the majority. I personally don't want that on iOS either but I least see why that is better for the majority of users.

Thanks!

I'm aware of (1), but you can't filter the music app to only show songs which are available at the time. You see your entire list, with 80% greyed out numbers (not downloaded) and 20% downloaded once...it's a pain to browse.

(2) That is awesome, didn't know that one.

As for (3), I don't want to delete playlists but a playlist (or genre, etc) with its associated songs, not individual ones. So the functionality in the music app is there, but not exposed in a good and useful manner.

(4) Makes sense, but I'm for a more sensible way of managing and playing songs, in iOS7 the usability has gone south to provide a more 'minimalistic interface'. It's beyond the scope for this forum subject so I won't go in detail here :-)

The reason not to use Spotify and Pandora is because they pay a minuscule amount in royalties to songwriters. If it was their choice they would pay an even lower amount than they do now. They are thieves.

No more thieves then most big companies. Pandora pays the statutory rate required by Congress, which is much higher than the rate traditional radio broadcasters have to pay which is nothing. With the exception of a few eighties mega stars like Madonna who have fabulous contracts, artists do not make money through music sales. The money is made touring and though merchandise sales.

When radio plays a song they pay performance royalties. I don't understand your logic about being a promotional tool. When you write a song and it is played on the radio or on television or in a film or in an ad or in a video game you should be paid a royalty for it. There is no argument you can make that will make me think otherwise.

Actually traditional radio broadcasters are exempt under the copyright act from paying royalties when they play music over the air. Internet broadcasters are not. The original thinking was broadcasters should not have to pay royalties as they help drive music sales. Internet radio was not around when the law was drafted.

Is it any wonder digital sales are dropping? Spotify offers £9.99 a month for unlimited music with no ads on your mobile / desktop and offline. Alternatively, people can pay £4-£14 for a single album (depending on how new it is and going by current iTunes prices). Streaming services such as Spotify are vastly cheaper than CDs if you like to browse for music or you want to get a lot of music quickly. The "pay once, own forever" argument also doesn't carry much weight with people (as seen from the success of subscription platforms) - even if a streaming service goes under, you just switch to another one and you've got everything back again.

I for one don't see any reason to go back to physical or digital copies - glancing at my current playlist, it's got upwards of 40 albums in it. Best case scenario, that would have cost me upwards of £300 on iTunes, which is 30 months' worth of Spotify. While it's nice to own something permanently, it's not nice enough to merit spending thirty times as much as I normally would. Two or three times as much, perhaps. But the premium being charged for a physical copy is looking increasingly silly.

On the other hand, the interesting thing about Spotify etc. is that they're putting a big dent in music piracy. People who used to pirate music are increasingly stopping in favour of streaming services, because they're a) reasonably priced b) easy to use and c) legal. Perhaps industry executives should be thinking more about that instead of "how can we get more money out of a dwindling market".

Actually traditional radio broadcasters are exempt under the copyright act from paying royalties when they play music over the air. Internet broadcasters are not. The original thinking was broadcasters should not have to pay royalties as they help drive music sales. Internet radio was not around when the law was drafted.

One of my first jobs was as a DJ, eventually station manager (for a thankfully very short time). We certainly licensed broadcast rights and paid royalties, via ASCAP and BMI at the time. In an odd twist tho I don't think the song performers themselves got part of that but instead only the record company. It wasn't a lot we had to pay either IIRC. The jukebox folks also paid licensing fees for the music they offered. That may have been some time ago but radio stations still have to pay for a license to the music they play as far as I know.http://www.bmi.com/creators/royalty/us_radio_royaltieshttp://www.ascap.com/licensing/

I remember my mom complaining about the Beatles in the early 60's. She said they were "shouting." And again, in the 70's. She listened to the White Album and thought the songs were "weird!"

Me? The White Album is still one of my favorites. I pretty much only listen to music I can play on my guitar (which is not a lot). It took me 30 years to figure out the correct chords for "I've Got a Feeling" and I can still only play the first part. My "go to" song when I'm running is "Get Back." One of the best rock and roll songs!

The other night I listened to "Abbey Road" all the way through. It was considered the best Album for 25 years or so. Lennon and McCartney were brilliant but some of the individual songs on the first side of the album sound a bit dated and over produced (not Lennon's, though). The second side medley is just brilliant...including the Lennon bits. They really complimented each other.

I'm aware of (1), but you can't filter the music app to only show songs which are available at the time. You see your entire list, with 80% greyed out numbers (not downloaded) and 20% downloaded once...it's a pain to browse.

(2) That is awesome, didn't know that one.

As for (3), I don't want to delete playlists but a playlist (or genre, etc) with its associated songs, not individual ones. So the functionality in the music app is there, but not exposed in a good and useful manner.

(4) Makes sense, but I'm for a more sensible way of managing and playing songs, in iOS7 the usability has gone south to provide a more 'minimalistic interface'. It's beyond the scope for this forum subject so I won't go in detail here :-)

Number 3 won't change. A Playlist will only ever consist of aliases, for lack of a better term, to the actual tracks. It would be nice to be able to delete entire albums or artists but I can see why they want it to be on a track-by-track basis.

The problem with Apple's solution is that it is safe but it does keep all iDevices from truly being just another device like your Mac or PC, which is something Apple seems to now want. A couple ideas are making iTunes in the Cloud so you can access your content from web interface and delete items with ease that way (but even that is unlikely to work on an iDevice as they try to steer you toward iOS apps) or making another section in Music that would allow you to go in specifically to delete multiple items.

This bot has been removed from circulation due to a malfunctioning morality chip.

Streaming services are great, glad they are finally a reality. Same with digital downloading. But streaming music is just the poor mans version of trying to own everything.

Owning music takes up space, with so much music out there it's hard not to have or want a large collection. Streaming music is a great tool for letting you decide exactly what you want to own. To me, that's it's intended purpose.

Anyone who complains about how expensive music is or how much space it takes and just uses a streaming service instead of owning their music, is cheating. The end result is for you to buy music. There is nothing wrong with this. It's the way it's been done for 75 years or so. Actually paying for and owning an album that is good isn't antiquated or flawed. It's the point. It's why people make music. Streaming is for you to decided what you want to keep.

So if you just stream and don't buy, I'm calling you a cheater. I'm saying you're cheap. You're a null and void person when it comes to fixing a broken industry. You're a leach.

Popular music keeps on shifting to ever lower, even poorer quality formats. If MP3 was not bad enough for the noobs, ... behold ... a whole new crappy experience with streaming music at about 1/10th the bit rate of CD. Oh yum: technology advances, and music quality goes back to the 1950s.

As for me ... I've been moving in the opposite direction, ... ----> to higher-quality physical formats that retain their value ... like hi-rez SACD and (very occasionally, when I am really in the mood) ... pure analog vinyl.

As for me ... I've been moving in the opposite direction, ... ----> to higher-quality physical formats that retain their value ... like hi-rez SACD and (very occasionally, when I am really in the mood) ... pure analog vinyl.

The reason not to use Spotify and Pandora is because they pay a minuscule amount in royalties to songwriters. If it was their choice they would pay an even lower amount than they do now. They are thieves.

You know that whole story last year was just some confused song writers that did not understand the difference between a streaming play and a radio play. They all get a lot more per listener for streaming than they do for the radio. Something around 10-20x more. Pandora, Spotify, and now Apple are way overpaying per play relative to what broadcasters pay.